Foreign exchange trading platform rbi

Foreign exchange trading platform rbi

Transactions in this segment are conducted through trading platforms like FXT-D2 (Thomson Reuters), FX-Clear (Clearing Corporation of India Limited (CCIL)) etc. before being settled by CCIL (for Cash, Tom, Spot and Forward USD-INR transactions) through a process of multilateral netting On June 6, , the Reserve Bank of India (RBI) announced to set up a foreign exchange trading platform for retail participants. This is to create a market infrastructure that ensures fair and transparent pricing for users of foreign exchange like Small and Medium Enterprises (SME) exporters & RBI pushed for trading platform to make forex cheaper for

RBI: RBI to set up forex trading platform for SMEs, get more players to setup Small Finance Banks

The discussion paper proposes a scheme to encourage transparent and fair pricing in the retail forex market by developing a foreign exchange platform for retail participants along the lines of the FX-Clear platform of Clearing Corporation of India Limited CCIL, foreign exchange trading platform rbi.

This is likely to provide transparency while enhancing competition leading to better pricing for all types of customers, without differentiating them on the basis of order size. Banks may charge their customers a fee towards processing expenses. Banks will be required to publicly declare such fees. The Chief General Manager, Reserve Bank of India Financial Markets Regulation Department 1st Floor Mumbai Regional Office, Shahid Bhagat Singh Marg, Mumbai — Or foreign exchange trading platform rbi email with subject line: Feedback on Retail FX platform by January 1, Jose J.

Kattoor Foreign exchange trading platform rbi General Manager. Discussion paper on foreign exchange trading platform for retail participants. The foreign exchange market in India may be broadly divided into the interbank segment and the retail segment.

The participants in the interbank segment are banks holding Authorised Dealer AD licenses under the Foreign Exchange Management Act FEMA Transactions in this segment are conducted through trading foreign exchange trading platform rbi like FXT-D2 Thomson ReutersFX-Clear Clearing Corporation of India Limited CCIL etc. before being settled by CCIL for Cash, Tom, Spot and Forward USD-INR transactions through a process of multilateral netting.

While proprietary electronic dealing platforms of individual banks and Multi-Bank Portals MBPs are also available, access to them is restricted to retail customers with a minimum order size. In one-to-one negotiated dealing over the phone, customers with large order foreign exchange trading platform rbi command more negotiating power compared to the ones having smaller forex requirement.

The issue of transparent and fair pricing in the retail forex market has been coming up in various fora and public interactions for some time.

This issue has also attracted attention of regulators worldwide, culminating in publication of the FX Global Code FXGC developed by a partnership between central banks which included the Reserve Bank of India and Market Participants from 16 jurisdictions around the globe. Principle 14 of the said code requires that the Mark Up the spread or charge that may be included in the final price of a transaction applied to Client transactions by Market Participants acting as Principal should be fair and reasonable.

Current guidelines on charges for forex transactions, foreign exchange trading platform rbi. Banks are also required to ensure that customers with a low volume of activity are not penalised, foreign exchange trading platform rbi. Para 6. Possible means for addressing the issue. While considering possible solutions for the above issue the following 2 options were considered:.

Mandating a cap on spreads charged over the inter-bank rates by banks to their retail customers. Facilitate price determination of retail customer transactions in the market by providing them direct access to the foreign exchange market. While choosing option a would make enforcement of the guidelines easier it has the disadvantage of interfering in the market determination of exchange rate.

It might also incentivise the banks to charge their customers at or very close to such a cap, without determining the charges based on their costs. Option b seeks to complement the current practice of banks deciding on spreads in one-to-one negotiated dealing with clients with client pricing being directly foreign exchange trading platform rbi in the market.

It is then left to the retail client to choose between the options according to its convenience. Option b is preferred as it is a market based solution and because it eliminates the price risk faced by banks in warehousing customer orders until they are aggregated and covered in the interbank market.

They would develop an electronic spot trading platform for retail customers modelled on their existing interbank spot trading platform. Based on experience gathered, vendors of other FX platforms may be allowed to offer similar retail platforms in the future.

The existing FX-CLEAR platform shall be extended to the retail customers of the FX-CLEAR member banks through an internet based application. The retail market will be separate from the interbank market, foreign exchange trading platform rbi. AD Cat-I banks may access both interbank and retail market while the retail customers would be allowed to access only the retail market for dealing.

The retail market will have the same market hours as the interbank market to hrs, foreign exchange trading platform rbi. The customer can access the retail market platform through an AD Cat-I bank. The AD Cat-I bank shall set the limits upto which orders may be placed on the retail forex platform by its customers. Trades will be executed by anonymous order matching on price-time priority.

Minimum order size would be USD and thereafter in multiples of USD Buy orders on the retail platform will be matched against sell orders therein and vice versa. The system will have a functionality to aggregate customer orders at the same rate up to the minimum lot size of the interbank market currently USD 0. This will ensure that prices in both the markets are in line. Aggregation of orders in vii will be across customers of same bank so as to minimise the number of deal tickets generated for the inter-bank deals.

Each matched trade of the customer would result in 2 transactions i. Thus, no change in the existing settlement system is envisaged. A schematic representation of the order execution process is shown at the end of the discussion paper. The features may undergo change depending upon feedback received on this discussion paper.

Comments on the discussion paper may be sent to the and Chief General Manager, Reserve Bank of India, Financial Markets Regulation Department, Central Office, 1st Floor, Mumbai Regional Office Building, Shahid Bhagat Singh Marg, Mumbai or emailed with subject line: Feedback on Retail FX platform by January 1, Your email address will not be published.

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My Account My Profile Submit Post Join Our Courses Union Budget no Section 1. Objective 2. Introduction 3. Issues to be addressed 4. Current guidelines on charges for forex transactions 5. Possible means for addressing the issue 6. Implementing the selected solution 7. Comments Schematic representation of the order execution process Discussion paper on foreign exchange trading platform for retail participants 1.

Introduction The foreign exchange market in India may be broadly divided into the interbank segment and the retail segment. Issues to be addressed The issue of transparent and fair pricing in the retail forex market has been coming up in various fora and public interactions for some time. Possible means for addressing the issue While considering possible solutions for the above issue the following 2 options were considered: a.

The key features of the proposed platform are as: i, foreign exchange trading platform rbi. The maximum order size shall be USDComments Comments on the discussion paper may be sent to the and Chief General Manager, Reserve Bank of India, Financial Markets Regulation Department, Central Office, 1st Floor, Mumbai Regional Office Building, Shahid Bhagat Singh Marg, Mumbai or emailed with subject line: Feedback on Retail FX platform by January 1, Tags: RBI Notifications.

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The platform, FX-Retail, is ready for rollout by the Clearing Corporation of India Limited (CCIL) on August 05, 2. The issue of transparent and fair pricing for retail users (individuals and Micro, Small and Medium Enterprises) in the foreign exchange market has On June 6, , the Reserve Bank of India (RBI) announced to set up a foreign exchange trading platform for retail participants. This is to create a market infrastructure that ensures fair and transparent pricing for users of foreign exchange like Small and Medium Enterprises (SME) exporters & /6/27 · The RBI released a ‘ discussion paper ’ in October that proposed the creation of a foreign exchange trading platform for retail participants. The paper categorised the foreign exchange market into two segments: inter-bank and retail. Two possible options were identified to encourage transparent pricing in foreign exchange blogger.com: Radhika Pandey